British stocks fell as a global bond selloff pushed UK 30-year gilt yields above 6% for the first time since 1998, before the rate eased to 5.9%. The FTSE 100 dropped alongside a rise in Brent crude tied to the unresolved U.S.-Iran standoff, while softer UK house-price growth and factory data added to the pressure.
British stocks slid Thursday as a global bond selloff pushed UK 30-year gilt yields above 6%, their highest since February 1998, before the rate eased back to 5.9%. The FTSE 100 was down 0.75% as of 08:48 ET.
Gilt yields spike on supply concerns
The move followed Tuesday's syndication of new 10-year benchmark gilts, priced to pay the highest yield on any issue of that maturity since 1999. As a result, U.S. 10-year Treasury yields also hit 5.362% on Wednesday as investors weighed inflation, deficits and bond supply.
According to the Guardian: Saxo UK strategist Neil Wilson said "the UK 30yr gilt has just broken 6%, its highest since 1998", adding that selling in bonds was heavy across the board and hitting stocks hard.
Oil climbs on the U.S.-Iran standoff
The unresolved U.S.-Iran standoff kept Brent crude near $100 a barrel. Brent futures later rose 2.05% to $100.04 a barrel and WTI gained 1.13% to $91.43, reversing earlier losses. Gold futures also rose 0.67% to $4,214.07 an ounce.
Weak UK data reinforces the squeeze
UK house price growth slowed to a nine-month low, with annual growth easing to 0.8% from 1.6% in August as higher energy prices and expectations of a higher interest rate weighed on demand, mortgage lender Nationwide said. Prices also fell 0.2% month-on-month.
UK manufacturing growth still edged up, with the PMI rising to 51.9 from 51.7, just below the 52.0 flash estimate. Supply chains remained under stress from shipping delays and geopolitical worries, pushing input price inflation higher for the first time in four months.
Sterling, meanwhile, slipped 0.23% to $1.3236 against the dollar. Germany's DAX edged up 0.03%, while France's CAC 40 lost 0.61%.
Sources: Investing.com, The Guardian
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